South Mogadishu warlord Hussein Aideed admitted his forces had lost Baidoa to the Rahanwein Resistance Army, but said Ethiopian tanks and heavy weapons were responsible for his defeat.

Ethiopia has strongly denied arming any militias or sending in its own armed forces.

Baidoa has been much fought over

There has been no independent confirmation of the situation in Baidoa.

The BBC's Cathy Jenkins, who is in Mogadishu, says Ethiopia and Eritrea, which are involved in a border conflict, appear to be waging a proxy war in Somalia.

She says Ethiopia is concerned that rebel Ethiopian groups - such as the Oromo Liberation Front - are being armed by Eritrea, and that weapons are being channelled through Hussein Aideed.

Eritrea has denied these allegations.

Ethiopia denies involvement in Baidoa

The town of Baidoa has been much fought over, and control has changed hands several times.

Last month, the Rahanwein Resistance Army captured it for a few hours, but quickly withdrew.

Embargo 'violated'

In recent months, there have been reports of arms being shipped to Somalia, in violation of a 1992 embargo.

Last Friday, the UN Security Council said it was alarmed by these reports, but did not name any countries that were in contravention of the ban.

Ethiopia has been accused of involvement in Somali rivalries elsewhere in the country.

In the south-western region of Gedo, the Somali National Front (SNF) alleged that Ethiopian forces had mistreated civilians and detained prominent business and religious leaders in the town of Luq.

When the SNF lost control of Luq to a breakaway faction on Saturday, the ousted SNF leaders said Ethiopian troops and military hardware were responsible for their defeat.

They said the Ethiopians had moved to capture two more small towns, Golwayn and Yurkud, some 40km from Luq.

However, independent sources said they had no information of more towns being taken.